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IG Markets – Morning Prices 29 October 2010

IG Markets – Morning Prices

29 October 2010

US markets closed mixed overnight after recovering from deeper losses as investors digested the latest round of earnings data and speculated on the Federal Reserve’s next steps to stimulate the economy.

The technology laden NASDAQ was once again the best performer, up 0.2%. The broad-based S&P 500 added 0.1% while the Dow Jones Industrial Average retreated 0.1%.

The ASX 200 is called to open slightly weaker, down 0.2% at 4678 after a relatively subdued session on Wall Street.

In terms of sectoral leads there are very little. We may see some modest gains among the healthcare, consumer staples and consumer discretionary names as they were the top performing sectors in the US overnight. However, in terms of the heavily-weighted materials and financials, leads were basically flat to mixed.

Base metal leads from the LME were all mixed while Rio and BHP saw some buying interest in London, rising 1.3% and 2.7%. BHP’s ADR is calling the locally listed stock 0.8% firmer, which could push the whole sector further into the black.

The big financials in the US largely treaded water while the likes of Goldman Sachs and Morgan Stanley both added 1.9%.

In summary, it looks like being a relatively subdued market open as traders position themselves ahead of the Melbourne Cup long weekend and next week’s FOMC meeting. The latest reading in Private sector credit is due at 11.30 and should draw some attention.

In foreign exchange trade, the markets sensitivity to QE2 expectations was there for all to see again overnight as the USD lost ground against all major currencies, undoing some of its recent gains. The biggest movers relative to the USD were the Euro and Danish Krona, which both rose 1.2% as traders appeared to increase the Fed’s easing expectations after the Federal Reserve asked bond dealers how asset purchases would influence yields, potentially suggesting they may be still open to a large scale purchase program on the 3rd November.

Better-than-expected initial jobless claims helped stem some of the strength in risk currencies as they dipped below the 450k mark for the first time in four weeks; it was the smallest rise in jobless claims since the 9th July and is a small, yet encouraging sign for the US economy. The AUD pushed up from 97.50 at the close of Australian trade to an overnight high of 98.20 before USD strength weighed, pressuring the pair back below 98c. Interesting comments this morning from the IMF will probably have little effect on the currency but are interesting none the less. They suggested the Australian dollar and house prices are 5-15% overvalued, the RBA should tighten rates but wont advise on timing and the RBA should guard against a spike in inflationary expectations.

Market Price at 8:00am AEST Change Since Australian Market Close Percentage Change
AUD/USD 0.9790 0.0037 0.38%
ASX (cash) 4678 -7 -0.16%
US DOW (cash) 11100 -35 -0.31%
US S&P (cash) 1182.9 -1 -0.10%
UK FTSE (cash) 5685 3 0.06%
German DAX (cash) 6604 9 0.14%
Japan 225 (cash) 9331 -42 -0.45%
Rio Tinto Plc (London) 41.06 0.53 1.31%
BHP Billiton Plc (London) 22.21 0.57 2.66%
BHP Billiton Ltd. ADR (US) (AUD) 42.31 0.32 0.76%
US Light Crude Oil (Dec) 81.92 -0.01 -0.01%
Gold (spot) 1344.4 17.1 1.29%
Aluminium (London) 2340 6 0.26%
Copper (London) 8323 -17 -0.20%
Nickel (London) 23050 180 0.79%
Zinc (London) 2494 -14 -0.56%
RBA Cash Rate to be raised by 25bp (Nov) (%) 24.00 2 2.00%

IG Markets provides round-the-clock CFD trading on currencies, indices and commodities. The levels quoted in this email are the latest tradeable price for each market. The net change for each market is referenced from the corresponding tradeable level at yesterday’s close of the ASX. These levels are specifically tailored for the Australian trader and take into account the 24hr nature of global markets.

ENDS


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